U.S. Producer Price Index Edges Higher in July; Core Price Index Strengthens
by:Tom Moeller
|in:Economy in Brief
Summary
- Goods prices less food & energy increase modesty.
- Service price decline follows three months of strong gain.
- Energy prices rebound; food prices strengthen.
The Producer Price Index for final demand increased 0.1% (2.2% y/y) during July after rising an unrevised 0.2% in June, according to the Bureau of Labor Statistics. A 0.2% rise had been expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.3% (3.3% y/y) in July after rising 0.1% in June, revised from no change. The PPI excluding food & energy was unchanged (+2.4% y/y) after rising 0.3% in June. A 0.2% gain had been expected.
Final demand goods prices excluding food & energy rose 0.2% last month (2.1% y/y) after holding steady in June. Finished consumer goods prices edged 0.1% higher (1.9% y/y) after remaining unchanged in June. Core nondurable goods prices rose 0.1% in July (2.4% y/y) after remaining unchanged. Durable consumer goods prices improved 0.1% (1.2% y/y) after remaining unchanged for two straight months. Capital equipment prices rose 0.2% in July (2.5% y/y) after three straight 0.1% increases, while government-purchased goods prices rose 0.3% (2.7% y/y) following two months of no change.
Services prices for final demand fell 0.2% (+2.6% y/y) in July, after two months of 0.4% increase. Trade services prices fell 1.3% (-0.7% y/y) after a 1.4% gain. Trade of finished goods prices weakened 1.4% (-1.0% y/y) and fully reversed the prior month’s increase. Prices for final demand transportation and warehousing services rose 0.4% last month (0.6% y/y) after a 0.1% decline. Services prices less these costs increased 0.3% (4.3% y/y) following a 0.1% uptick.
Final demand energy prices rebounded 1.9% last month (0.3% y/y) after a 2.1% decline. Gasoline prices jumped 2.8% (-4.9% y/y) after falling 5.4% in June. Home heating oil prices strengthened 9.6% (-1.8% y/y) following a 5.0% decline. Electric power prices weakened 0.8% (+2.4% y/y) after falling 0.3. Natural gas prices increased 0.9% (1.0% y/y) after rising 1.9% in June.
Food prices rose 0.6% during July (1.7% y/y) after edging 0.1% higher in June. The gain reflected a 10.3% rebound (4.4% y/y) in fruit & melon prices following two months of decline as well as a 5.4% drop (-17.9% y/y) in fresh vegetable costs which came after falling for three straight months. Grain prices fell 6.2% (-27.9% y/y) and processed fruit & vegetable costs rose 0.8% (4.0% y/y). Beef & veal prices rose 7.7% (5.2% y/y) after rising 2.0% and fresh egg prices declined 8.9% (80.4% y/y).
Construction costs rose 0.8% in July (1.4% y/y) after rising 0.4% in June.
Prices for intermediate demand processed goods rose 0.7% (0.8% y/y) in July after falling 0.2% in June. Processed energy goods prices rose 2.8%, while food prices increased 1.8%. The index for intermediate demand unprocessed goods increased 3.6% (3.2% y/y).
The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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